“Time is Money!” That old adage has never rang more true. As labor costs increase and competition is driving businesses to become more efficient, businesses are searching for tools to help them overcome these challenges. “If you can’t measure it, you can’t manage it,” was the mantra of one of the presidents I used to work for. Below, you will discover the various ways to measure and track employee time and attendance.
Service-Oriented Businesses
Certain businesses have a real need to track employee time and attendance. Most of these are service-oriented businesses, where employee time is billed directly to the customer. Others are service or labor departments, where employee time is a direct cost to the company. Here are a few examples of businesses that require employee time tracking:
- Consulting
- Accounting
- Law Firms
- Distribution/Warehousing
- Repair Service Companies/Departments
- Auto Repair
- Installation Companies/Departments
Manufacturing Businesses
Businesses that are manufacturing-oriented also need to track where and what employees spend their time on. Some manufacturing companies focus on customized products that are unique to an individual customer. Other manufacturers produce common products that are distributed to a variety of different customers. Either way, you need to track how much labor is going into the cost of producing the product.
Three Reasons to Track Time
There are three basic reasons to track employee time.
- Time and attendance: For payroll purposes
- Billing: When an employee’s time is directly billed to a customer
- Costing: When an employee’s time is directly related to the cost of a product
Ways to Track Time
There are a number of different ways to track employee time, and each method will be better in some situations that in others. As you read each description, evaluate the method that is described and decide if it will fit your need.
- Paper Forms are the simplest way to ask employees to account for their time. The form is then sent to a clerk to be manually keyed into the system. This method assumes employees keep accurate records of their time. No equipment is needed and forms are very portable. Additional labor costs will be encountered by employing a clerk to key the sheets.
- Punch Cards are another simple method. Each week, or day, cards with employee names have to be created and a punch clock (or clocks) must be purchased and located in a central and convenient location. The cards are then sent to a clerk for manual keying. This method is more accurate because the clock stamps the card with the correct time.
- Wall Mount Swipe Clocks are somewhat similar to punch-type clocks, except there are no paper cards to create every week. Employees use their ID card to swipe in or out each time. The clock is connected to a computer and data is entered automatically into the system. Additional costs will be encountered for creating employee ID cards.
- Wall Mount Biometric Clocks operate the same way as swipe clocks and have the same advantages, except they use a finger print or a hand print to identify the employee. Although this eliminates the “friend-swiped-me-in/out” scheme, they do cost significantly more.
- Handheld / Portable devices are ideal for employees that work in the field. These clocks are an alternative to paper forms and are just as portable. The clock will keep track of the employee’s time no matter where they are. When they return to “home base,” the data is uploaded to the central computer for processing. The down side is that you must purchase one for every employee in the field.
- Web Clocks are used for employees that work from home and are cheaper than the handheld portable clocks. This isn’t a physical clock, but a software program that runs on a server or over the Internet. When the employee starts or stops working, she logs in or out with a user ID and password. This is like an electronic version of a punch clock, but the data is already entered into the computer.
The Software Interface
Time and attendance data is worthless unless there is a system that can take the data and turn it into something that can be used to run your business. No matter which type of system you buy, there are two fundamental uses for this data:
- Payroll Software or Service: Data is used to generate a payroll every period.
- Accounting Software: Data is used for customer billing or calculating the cost of a product.
If you already have a service or software package that performs your payroll or accounting services, you will want to check with technical support to see if they have any prepackaged solutions that integrate with their software. If you are buying for the first time, you will want to include one of the systems above in your specifications when you select a package or service.
